Capello had been in talks with former FA chief executive Lord Triesman to update his contract and remove the break clause, before Triesman's recent resignation.

Club England chairman Sir David Richards took over the job of negotiations with Capello, and once it became clear the FA's acting high command held similar opinions to Triesman, the Italian confirmed he would remain with England until the end of the Euro 2012 tournament in Poland and Ukraine.

"We are very pleased to have Fabio's commitment for another two years and it is good that we have been able to resolve this before the team flies to South Africa," said Richards.

"Now we can all concentrate on the World Cup and give Fabio and the players our full support."

Former England manager Glenn Hoddle also welcomed the news, telling BBC Sport: "It's a good move for Fabio, the FA and more importantly, for this next five weeks, the players.

"They are going to know if they play well, and he can trust them, that they are going to be in the Euro 2012 Championship squad as well.

"It's not like there's going to be a new manager coming in and they're going to have to start all over again, so that bodes well for the future."

Capello's decision to stick with England will be a disappointment to newly crowned European champions Inter Milan.

Following Jose Mourinho's departure from the club to take over as Real Madrid coach, Inter club president Massimo Moratti had said he "would be pleased if he [Capello] frees himself after the World Cup".

Capello was officially confirmed as England manager on 14 December 2007, after Steve McClaren's departure following an unsuccessful attempt to qualify for Euro 2008.

His first match was a 2-1 win over Switzerland in a friendly at Wembley in February 2008.

The Italian oversaw an impressive qualifying campaign for the 2010 World Cup, with England winning nine of their 10 Group Six matches, including a 4-1 win in Zagreb against Croatia and a 5-1 success against the same opponents, to clinch their spot in South Africa with two games to spare.

As a club manager at AC Milan, Real Madrid, Roma and Juventus, Capello has won nine league titles as well as lifting the Champions League with Milan in 1994.

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